Demand for income protection (IP) insurance among individual consumers is set to contract “sharply” after a buoyant period of sales and enquiries, independent research suggests – but brands that get their marketing and propositions right stand to benefit in the long-term.
The huge slump of mortgage cross-selling opportunities is one of the reasons behind the contraction in demand in the short-term.
But researchers at Mintel said that the Government’s easing of lockdown restrictions, to now allow viewings to be carried out and conveyancers to restart operations, could mean in the medium term there is a “possibility” of a “small initial bounce” as housing market activity restarts.
But researchers warned that overall sales will remain sluggish as housing market activity is subdued for the rest of 2020.
Douglas Kitchen, who headed up the research for Mintel, said that the expected COVID-19 recession will result in a “sharp rise in unemployment and increased pressure on household finances”.
In addition, the IP industry will face the “dual blow” of a possible increase in claims costs, and a hit to sales as a result of consumers trying to cut outgoings to a minimum.
But Kitchen said there remains “long-term scope for optimism” as individuals “wake up” to how vulnerable they are to a lengthy period off work.
He said this should lead to more considering cover in the future – “if the industry can tap into this sentiment in the right way”.
Kitchen said that brands can use this period to develop strategies for products and promotions that will be more relevant in the post-COVID environment, as well as focusing on delivering services to existing customers and providing “much-sought after” reassurance.
More targeted campaigns that connect with the challenges faced by specific groups, such as renters, will be more effective, in the future.
General confusion remains about what IP covers, he said, and where it fits in relation to other, often overlapping, protection products such as critical illness cover, the researchers said.
More about the research and the report’s predictions about the future is available here.